Regarding external financial reporting for governmental units, a reconciliation must be shown of the total fund balances in the fund-based statements for governmental activities to the total net assets for governmental activities in the government-wide statements.

Question

Quizplus · Accepted Answer

This reconciliation is necessary because the fund-based statements for governmental activities are prepared using the modified accrual basis of accounting, while the government-wide statements are prepared using the full accrual basis of accounting. This difference in accounting methods requires a reconciliation to explain how the total fund balances in the fund-based statements relate to the total net assets shown in the government-wide statements.

Regarding External Financial Reporting for Governmental Units, a Reconciliation Must